Development Group Buys Fort Worth Tower
December 3,2018
Commercial Property Executive article by Scott Baltic
Development Services Group Inc., of Memphis, has purchased 714 Main St., a historic 24-story office building in downtown Fort Worth. JLL represented the seller, XTO Energy Inc., a subsidiary of ExxonMobil.
Encompassing more than 185,000 square feet of office space, 714 Main was built in 1921 and renovated in 2010. Its location at 7th and Main streets is only two blocks from the Fort Worth Convention Center.
More notably, JLL has now negotiated the sale of six of XTO’s office properties in downtown Fort Worth, in conjunction with the company’s relocation of its headquarters to Houston.
In August, XTO sold the historic WT Waggoner Building at 810 Houston St., completed in 1920, to Dallas Stars’ owner Tom Gaglardi’s Northland Properties Corp. The 20-story, 137,500-square-foot building went for an undisclosed price.
In January, XTO, again with JLL’s representation, sold the Petroleum Building to Sundance Square, which owns and manages 35 contiguous blocks in downtown Fort Worth. XTO also sold three other, smaller buildings.
DSG did not respond to Commercial Property Executive’s request for additional information regarding 714 Main. However, in October the Fort Worth Star-Telegram reported that, based on discussions with local officials, DSG appeared intent on redeveloping the building into a 232-key, four-star hotel.
A DELICATE, HIGH-STAKES PROCESS
A long-term project to represent a major client in the sale of six buildings in a single market of course presents both challenges and the opportunity for lessons learned. JLL Executive Vice President Ryan Matthews, who headed the project, shared his thoughts on the process with CPE.
First, Matthews noted, “JLL was fortunate to represent a client that didn’t have a specific timeline to divest all six assets.” This gave JLL the time to understand the supply and demand correlation and to put just one asset at a time onto the market.
“It was apparent early in the marketing process that the hospitality sector was going to have a strong interest in multiple buildings,” he continued. Though JLL anticipated that one or two office users might be interested in all or part of one of the larger office buildings, “The hospitality use ended up being able to attribute more value to the buildings, because the only alternative was new construction.”
One issue for the whole process, Matthews explained, was the appraisals. “The lack of comparable building sales of this size, finish and location made the building valuations difficult.”
In the end, he said, “an open bid process was required to establish market value for each of the buildings and ensure that XTO was getting equitable compensation for these unique properties.”